Consumer rewards, loyalty and membership programs are programs sponsored by merchants, services, corporations or clubs as marketing programs that provide consumers with incentives for repeat business, for example to continue purchasing from a particular merchant by providing the consumer with a number of reward or loyalty points based on the number of dollars spent with the merchant. The points may be redeemed by the consumer for cash, merchandise, coupons, or discounts once the consumer has reached a certain point threshold. These programs are typically implemented by merchants asking consumers to complete a paper or online application at the point of sale or elsewhere and thereby issuing the consumer a merchant-branded rewards card which the consumer must present with payment at the time of each purchase with the retailer in order to obtain reward points for their purchases. Under this current system there are inefficiencies for both consumer and merchant.
The first issue affecting the consumer is that in order to enroll in a merchant rewards program, the consumer must complete an application, usually in paper form, and usually at the point of sale. Many consumers may consider this a hassle and may choose not to participate. Other consumers may also view this as an unnecessary step in the point of sale process causing a delay in each consumer's transaction time.
Another problem affecting the consumer is that consumers, who choose to enroll in a multitude of merchant rewards programs, are expected to carry a separate card for each merchant or rewards program for which the consumer is enrolled. If the consumer does not have the rewards card at the time of a purchase, the consumer may not receive the point rewards for the purchase and the merchant misses an opportunity to gain valuable demographic and consumer spending data.
Merchants also encounter difficulties under the current system. The current system can be very expensive to implement, thus eliminating the option for smaller merchants to offer a rewards program. Larger merchants may not see as much return on investment because the process is so cumbersome for consumers to join and participate. Much of the merchant benefit is lost if consumers are not likely to enroll or to carry and use the rewards card. The terms “rewards”, “loyalty” and “membership” are used synonymously herein, and include and mean any program or plan whereby a consumer of goods or services is acknowledged or rewarded or recognized for his or her purchases from a business such as a retailer or service provider. For example, a consolidated consumer rewards system may include any program which enables, acknowledges, rewards (monetarily or otherwise) or tracks the purchases of any consumer of any goods or services. As used herein, the term “merchant” refers to any provider or seller of any goods or services, whether retail, wholesale or business-to-business. As used herein, the term “consumer” means any purchaser of goods or services, whether any individual or business entity, or for personal or commercial use.
A problem affecting both merchants and consumers is that consumers rarely update their addresses with merchants. If a consumer moves to a new address they may not receive the coupons, catalogs, and other incentives that are often mailed to the consumer to encourage them to visit the merchant. Merchants therefore spend money mailing these coupons and catalogs to the wrong people and consumers do not see the benefits they were promised.